Deal between utilities E.ON and RWE set to reshuffle German energy market

German energy companies RWE and E.ON have agreed to a deal in which E.ON will buy RWE's green power subsidiary innogy and the two utilities will exchange large parts of their assets to focus their activities. The deal would drastically reshape Germany's energy landscape, already in turmoil as the country's phase-out of nuclear power and transition to renewable power sources is wrecking old business models, and new competitors enter the frame. Following the deal, E.ON is to concentrate on the highly regulated distribution grid with its stable returns and end-customer focused energy solutions, while RWE takes on E.ON's and innogy's renewable businesses, on top of coal- and gas-fired power plants. As part of the complex deal, E.ON will grant RWE a 16.67 percent stake through a capital increase from existing authorised capital, and make an offer equalling 40 euros per share to innogy shareholders. RWE will also pay 1.5 billion euros in cash to E.ON as part of the deal.
RWE said in a press release the deal would turn it into “a leading European utility for renewables and security of supply with a broadly diversified portfolio of renewable and conventional generation assets”.
E.ON would become Europe's largest power retail company, the Handelsblatt writes. The deal still hinges on the approval of E.ON’s and RWE’s company boards, and the go-ahead from Germany’s antitrust and competition regulatory authorities. The role of the EU commission is not clear yet, Karin Matussek writes for Bloomberg.

Find the E.ON press release in English here and the RWE press release in English here.

Find a collection of reactions to the deal from German politicians, energy companies and researchers here.

Check the CLEW dossier Utilities and the energy transition for background on Germany's changing energy market.